Monthly Archives: April 2010

We came across a paper presented by an appraiser at a CLE International program on eminent domain, a few years ago. Here is an excerpt from it, without comment:

“The most important factor that affects appraisers preparing reports for governmental agencies is that the majority of assignments involve ‘projects’ that have multiple parcels. An example of this type of project is a road widening project that requires the acquisition of right-of-way from several parcels along a particular road. In these multiple parcel projects the initial appraisals are written with time and budget restraints. Appraisers who are hired by government agencies must submit a fee schedule that is competitive with other appraisers who are bidding on the project. The appraisal process and fees are part of the overall budget that the government agency has set in order to complete the project.

“It is difficult for appraisers who accept these multiple parcel assignments to spend time and effort in preparing an effective initial report due to the fact that the fee allocated to each parcel reflects a bulk discount and the appraiser is not in a mindset that each report will end up being involved in a court proceeding. As appraisers we all know that an appraisal that is intended to assist in eminent domain proceedings can end up being involved in a court proceeding and we may have to provide expert testimony based on the initial report. However, we also realize that if a property owner does not accept the offer of just compensation based on the initial report and condemnation proceedings are filed, we will have the opportunity to complete another report knowing that this appraisal will have to stand up to cross examination and much more scrutiny.

“I call the initial appraisal process involving a multiple parcel project, ‘Throw it against the wall and see what sticks.’ As appraisers we know that only a few private property owners want to take their cases to court.”Keith Harper, President, Member of the Appraisal Inst., Preparing an Effective Appraisal Report, Handout at CLE International Eminent Domain Program H-1 (Mar. 18-19, 2004)

Though overshadowed by Daniel Godstein’s heroic, determined fight against the taking of his home for the infamous Atlantic Yards redevelopment project in Brooklyn, Freddy’s Bar, a long-established local saloon has been fighting the good fight as well. But in the end, it too settled with the redeveloper. The New York Post reports that

[Freddy’s manager] O’Finn said that developer Ratner and Freddy’s owner Frank Yost reached an agreement last Thursday that allowed the bar to move its contents to a new location — an alternative to continued fighting and a likely loss of everything in the condemnation process that is making room for the proposed Barclays Center.

“[Yost] struck a deal with Ratner,” O’Finn said, adding that Freddy’s didn’t make a fortune from the negotiations. “It’s not more than what we would get if we were open for the remainder of our lease — it’s not some tremendous amount of money.” Stephen Brown, Freddy’s Bar, Eminent Domain Poster Child to Close April 30, N.Y. Post, April 22, 2010.

That settlement may not be a “tremendous” amount of money, but it provides a greater measure of damages than what Yost would have likely received as “just compensation” had he gone to the mat in an eminent domain valuation trial. Under New York law, no compensation is provided for business losses suffered when a busoiness property is taken by eminent domain.

The closing of Freddy’s Bar appears to be the kind of rending of the social fabric of a neighborhood that Jane Jacobs deplored in her famous book, “The Death and Life of American Cities.”

The familiar reason offered by the U.S. Supreme Court (most recently in the Kelo case) why judges are so supinely deferential to what they characterize as “legislative” decisions to use eminent domain, is that aggrieved citizens have recourse to the democratic process, and are free to elect other “legislative” officials, more in harmony with their views. But if you think about it, that’s nonsense. The decision to condemn a particular property for a particular “public use” — whether genuine or feigned — is at best made by unelected government functionariers, such as highway commissions or redevelopment agencies.

So when the Supreme Court says that the “legislative” decision to condemn is “well nigh conclusive,” it only surrenders its traditional function of interpreting the constitution and its duty to do so under the checks and balances doctrine. After all, we are endlessly told that it is the courts in general and the Supreme Court in particular who are the interpreters of constitutional provisions. So how come they abruptly lose their ability to perform that function when it comes to the “public use” clause of the Fifth Amendment?

Daniel Goldstein, the tenacious property owner who fought to prevent the taking of his dwelling for the Atlantic Yards project, explains why he finally accepted a $3 million offer for his condo:

“There was one overarching reason they paid me to leave early. Basketball.

“The court was unlikely to agree to an accelerated eviction date of May 17 — it would be just a few days after the state would by paying me its original “just compensation.”

“However, the billionaire Russian oligarch, Mikhail Prokhorov, could not assume ownership of the Nets, nor prepare for the NBA draft and free-agent market, in his effort to rebuild the NBA’s worst team until my apartment was vacated.The state’s May 17 eviction date may have appeared arbitrary, but May 18 is the NBA draft lottery, and Prokhorov wanted to be at that lottery. That’s not what ESDC or Ratner told the judge or the press last week. But that was their motivation.“As to why the state thought it so important to evict my family and me on Prokhorov’s NBA schedule, so he could encrust his plaything with diamonds, is something that speaks for itself.”

“At present, 9 of every 10 new mortgages are sold to, or guaranteed by, arms of the U.S. Government, the majority of them to Fannie and Freddie. Which is to say, without Uncle Sam, it is not clear that the private market for housing would even exist.”

We recommend that you read this entire article. It’s short, so it won’t take much of your time.

Chief Justice John Roberts complained in a recent state of the judiciary statement that only 40% of new federal judges come from private practice, and the balance from various government positions. There is nothing wrong with judges having a government background. But there is such a thing as too much of a good thing.

A similar situation obtains on the state side. We have noted before that in California new judges tend to come overwhelmingly from the ranks of government lawyers, although to be fair, we also note that the proportion of private practitioners has been rising in recent batches of judicial appointments by our Governator.

But over at the Los Angeles Times, the editorial board can’t get enough government lawyers on the bench. Case in point: the coming election. The Times has endorsed six candidates for contested judicial seats. They consist of two sitting judges (who are being challenged), one Referee (a sort of a judge pro tem), one hearing officer for the Los Angeles Police Department, one Deputy Attorney General, and one Deputy District Attorney. Not a single individual currently in private prtactice.

This isn’t good, folks. A bench composed largely of former lawyer-bureaucrats gives rise to obvious problems, not the least of which is the fact that judges with no significant private sector experience may be something less than stellar performers when it comes to subtleties of insurace coverage.

No wonder the most sophisticated litigants, represented by the best lawyers are abandoning the public court system in large numbers, and are hiring rent-a-judges instead.

The city of Los Angeles has been plagued lately by a rash of broken water mains that have sent water gushing along the surface, flooding a number of homes and causing widespread damage. Predictably, this has inspired a rash of claims against the city by the affected homeowners who are demanding compensation for the damage to their property and the loss of their personal effects. So far, no inverse condemnation actions have been filed — at least the Los Angeles Times mentions none.

The claimants are angry over what they say are the city’s delaying tactics, and the city explains that some of the claims appear exorbitant, so it needs time to check them out. The Los Angeles Times, tells us all about it in Jessica Garrison, Broken Pipe Talks Stall, L.A. Times, April 22, 2010, at p AA1.

But buried in the Times story is this gem:

“Officials also learned last week that a team of outside engineers and scientists had concluded that the city’s own lawn-watering restrictions may have been a prime factor in causing last year’s rash of blowouts by creating excessive pressure fluctuations in aging pipes.”

So there you have it folks — preservation policies may have costs associated with them, including unanticipated costs. Do-gooderism can turn out to be expensive. No one to the best of our knowledge has done the number-crunching on this one, but it’s possible that the amount of water lost in all those pipe ruptures exceeds the amount of water saved by following those lawn-watering restrictions. Do you suppose?

MORR, Municipal Officers for Redevelopment Reform, will sponsor a conference on redevelopment abuses on May 1, 2010, at 8:30 AM to 5:00 PM, at the Ontario Airport Marriott, in Ontario, California.

The keynote speaker will be Scott Bullock who represented Susette Kelo before the U.S. Suppreme Court. The speaker list includes, among others, John Eastman, current candidate for California Attorney General, as well as Timothy Sandefur who, in our opinion, is one of the best minds on the scene.

According to the Times, Goldstein bought his condo in 2003 for $590,000, but the condemnor offered only $510,000. The settlement, however, is for $3,000,000, plus an agreement whereby Goldstein will not speak out to oppose the project.Because of that last provision, it is difficult to say whether Goldstein’s case qualifies for inclusion in our regular Lowball Watch feature, or whether he took the redeveloper to the cleaners. Either way, this appears to be the end of the Battle of Atlantic Yards. It now remains to be seen if the redeveloper actually delivers on the grandiose plans for his project, and how long it will take.

The Times report makes no mention of whether this settlement includes interest and attorneys fees.

The moral also seems to be that sometimes it may be cheaper to pay off a determined holdout, than to go to the mat with him. It would be interesting to learn what this caper has cost both the city and the redeveloper, considering the cost of litigation and delay,

Follow up. Readers with access to the National Edition of the New York Times, will find this news item as Charles V. Bagli, $3 Million Deal Ends a Holdout in Brooklyn, N.Y. Times , April 22, 2010, at p. A21.

Shedding some light on our question of what this caper has cost, Bagli mentions in his article that “the developer is paying $6.7 million a month in finance and other overhead costs.”

Also, in a public statememnt issued today by Develop Don’t Destroy Brooklyn (DDDB), Daniel Goldstein denied that as part of the settlement, he gave up his right to speak out against this project. As the Times puts it, Goldstein “agreed to step down as spokesman for Develop Don’t Destroy Brooklyn, the main group opposing Atlantic Yards. And he said he would withdraw from any litigation and not ‘actively oppose the project,’ although he said he held on to his First Amendment Rights.” You figure out what that means. See http://www.dddb.net/php/latestnews_ArchiveDate.php

The New Jersey Star Ledger (nj.com) reports that the Appellate Division struck down a Long Branch redevelopment project as inconsistent with new developments in New Jersey right-to-take law. See nj.com, Mary Ann Spoto, Appeals court rules Against Long Branch in longtime eminent domain dispute, April 16, 2010; see http://www.nj.com/news/index.ssf/2010/04/appeals_court_rules_against_lo.html

Though the court gave Long Branch another chance to do it rights, the city’s mayor is quoted as saying that that the city will not use eminent domain, and will proceed with the redevelopment without using it, thus demonstrated that it can be done.